LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY COMMITTEE SUBSTITUTE FOR
ASSEMBLY, No. 1255
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: DECEMBER 27, 2023
SUMMARY
Synopsis: Updates requirements and standards for authorization and prior
authorization of health care services.
Type of Impact: Annual impact to State General Fund; annual impact to certain local
government units; potential annual State revenue increases.
Agencies Affected: Division of Pensions and Benefits in the Department of the Treasury;
certain local government units.
Office of Legislative Services Estimate
Annual Fiscal Impact
State Expenditure Impact Indeterminate
State Revenue Increase Indeterminate
Local Expenditure Impact Indeterminate
 The Office of Legislative Services (OLS) estimates that requiring contracts entered into by the
State Health Benefits Commission or the School Employees’ Health Benefits Commission
with a vendor to comply with the new time frames for providing information concerning
utilization management and governing prior and concurrent authorization for health care
services under this bill will have an indeterminate impact on State and local government unit
annual costs for State Health Benefits Program and School Employees’ Health Benefits
Program expenditures.
 The OLS also anticipates that this bill could result in modest indeterminate revenue increases
to the State General Fund and the State Health Care Subsidy Fund due to penalties resulting
from violations of the bill’s provisions.
BILL DESCRIPTION
This bill updates the requirements and standards placed on health insurance carriers, benefits
plans, and payers for the authorization and prior authorization of health care services.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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Under the bill, contracts entered into between the State Health Benefits Commission or School
Employees’ Health Benefits Commission with a vendor must also comply with certain provisions
regarding new time frames for providing information concerning utilization management and
governing prior and concurrent authorization for health care services.
The bill states that prior authorization for treatment of a long term care or chronic condition or
service which includes a defined number of discrete services within a set time frame is to remain
valid for 180 days in certain circumstances and prior authorization granted by a previous payer is
to remain valid for at least the initial 60 days of coverage under a new health plan.
The bill also requires payers to communicate prior authorization denials for covered persons
who will receive inpatient services or outpatient services within a shorter time frame than under
current law.
Additionally, the bill requires health insurance carriers to provide contracted in-network health
care providers with written notice of changes to its use of utilization management policies and the
processing and payment of claims no less than 90 days before implementation and requires payers
to make readily available statistics on prior authorization approvals and denials on the website of
the payer.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS estimates that requiring contracts entered into by the State Health Benefits
Commission or the School Employees’ Health Benefits Commission with a vendor to comply with
the new time frames for providing information concerning utilization management and governing
prior and concurrent authorization for health care services will have an indeterminate impact on
State and local government unit annual costs for State Health Benefits Program and School
Employees’ Health Benefits Program expenditures.
The OLS also anticipates that this bill could result in modest indeterminate revenue increases
to the State General Fund and the State Health Care Subsidy Fund due to penalties resulting from
violations of the bill’s provisions.
The OLS is not able to determine the current time frames used by Horizon for prior
authorization for long term care or chronic conditions within the State Health Benefits and School
Employees’ Health Benefits programs, the extent to which these programs honor prior
authorization approvals granted by previous payers, or whether and how requiring payers to
communicate prior authorization denials for covered persons who will receive inpatient services
or outpatient services within a shorter time frame or requiring payers to make certain statistical
information regarding prior authorization approvals and denials available their websites will
impact State Health Benefits Program or School Employees’ Health Benefits Program
expenditures.
According to the Executive Branch’s responses to the OLS’ FY 2024 Interdepartmental
Accounts discussion points, Horizon’s prior authorization medical benefit policy for Plan Year
2022 resulted in State savings of $77.1 million for that year. The carrier’s prior authorization
pharmacy benefit policy for Plan Year 2022 resulted in combined State Health Benefits Program
and School Employees’ Health Benefits Program savings of approximately $100 million for Plan
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Year 2022. This bill may impact those savings, but the direction and magnitude of the impact are
unknown.
Section: State Government
Analyst: Anna Harris
Assistant Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).